LDP report urges G-7 nations to work together on rupiah
LDP report urges G-7 nations to work together on rupiah
TOKYO (Reuters): The Group of Seven (G-7) nations should promote international cooperation to stabilize Indonesia's rupiah, a delegation of Japan's ruling Liberal Democratic Party (LDP) which visited the country recently proposed in a report yesterday.
The delegation's proposal is likely to be included in the party's economic package to be released on Friday, Taro Nakayama, the head of the delegation and a former foreign minister, told reporters.
The group proposed that the Export-Import Bank of Japan make about 300 billion yen (US$2.4 billion) worth of loans available for Asia this fiscal year ending March, which would be financed by the government's fiscal investment and loan program as needed.
This program is funded by postal savings and other public funds and is referred to as the government's second budget.
The Ex-Im Bank's loans will used to promote exports from foreign countries to Japan, to help Japanese overseas subsidiaries which may have trouble obtaining loans, and as two- step loans, which are made to foreign governmental financial firms which would then lend to their domestic firms, the report said.
It also said the Japanese government should continue to extend short-term credit insurance on exports to Asian countries, regardless of whether they are guaranteed by letters of credit issued by Asian banks.
The government extended such guarantees amounting to about $13 billion per year to Indonesia, Thailand and South Korea before the Asian currency crisis began last summer.
The report said the government should also ask other industrialized countries to actively cooperate in extending trade insurance.
The government should also expand insurance coverage on loans made by Japanese banks to Asian companies, it said.
Japan made a $1 billion credit line available for Thailand in November to cover not only defaults in case of war and restrictions on foreign currencies, but also company bankruptcies.
The group proposed making $1 billion available for Indonesia within this fiscal year.
Japan is ready to help Indonesia, which is facing a rice shortage of more than three million tonnes, through government yen loans, the report said, adding it should also give medical aid to Jakarta.
The delegation also proposed that Japan extend interest-free yen loans to Asian countries so that the money could be used to help government-funded programs which send students abroad.
Japan also needs to quickly boost its economy and improve its market access to help Asian imports. It should also make efforts to carry out financial system reforms to make the yen easier to use as a global currency, the report said.
Japan's rice
Meanwhile, a Food Agency official in Tokyo said yesterday Japan is likely to send rice aid to crisis-hit Indonesia, which is suffering from food shortages and expects a shortfall of 3.3 million tons of rice this year.
Asked about an Indonesian request for one million tons of rice, the official told Reuters: "We have to do something. We are considering (rice aid)."
Taro Nakayama, a former Japanese foreign minister who led a recent mission of members of the ruling Liberal Democratic Party (LDP) to Southeast Asia, said on Wednesday that a party panel was considering the request from Indonesia.
Indonesia is undergoing its worst economic crisis in decades, with zero growth, soaring inflation and scattered riots.
Even though Japan rice stocks have risen in the past few years, the Food Agency official said it would be a problem financing supplies of domestic rice to Indonesia as it is five to six times more expensive than that on the international market.